Fatih Özatay, PhD - [Archive]

Exchange rate and illegal use of electricity 06/04/2009 - Viewed 2755 times

Last week, important figures were announced: We learned growth rate in 2008, temporary export figures and inflation rate for. Before that, confidence index figures were released. Moreover, we learned the loan figures regularly announced on a weekly basis. There are no positive developments except for inflation (core inflation) rate. Therefore, there is no news. Of course, these figures pertain to the 'past'.

However, we have to 'look ahead toward forthcoming games'. Are there indicators that in the forthcoming games, we will not pursue the same game scheme and thus face with the risk of falling from the big league to the minor league? The answer to this question depends on exogenous conditions (the weather conditions; for instance is the court icy?) as well as what we are going to do (does the team practice hard? Will the coach change the game setting? Will the management step in?)

Anyway, I am touching upon such issues frequently. Today, I would like to address a different subject; energy sector and focus on electricity consumption. The graph shows the change in an important rate between 1970 and 2007: the ratio of supply system loss that composes of the sum of transmission loss and delivery loss to total electricity energy supplied in the system. The rate of loss has recently been decreasing. However, even the 'decreased' rate of loss is too high. According to '2007-2008 Turkish Energy Report published in December 2008 (a publication of World Energy Council Turkish National Committee), rate of loss in 2007 is 14.5 percent. The same report also reveals that the rate in Turkey varies significantly above international standards.

There is no significant problem with respect to transmission loss; it is in line with the standards (around 2.5 percent). However, delivery loss stands at quite high rates. A significant part of this loss is related with illegal use of electricity and the rest is related with the technical incapacity.
Serious and registered industrialists complain about the high electricity prices.  This situation increases costs. In a way, the cost of the electricity that cannot be collected due to illegal use is paid by registered users.

Now, in the light of a few simple abovementioned figures, one cannot help reaching this conclusion: It becomes strikingly apparent how those neglecting real problems and focusing solely on exchange rate in context of international competitiveness of Turkey push the main issues that must be discussed out of the agenda. In particular in the context of the current export volume that deceased by 35 percent despite rising exchange rate...

Graph 1: Ratio of supply system loss to total electricity supplied in the system (%, 1970-2007)

This commentary was published in Radikal daily on 06.04.2009